Mex­i­can cen­tral bank raises rate

Kuwait Times - - BUSINESS -

MEX­ICO CITY:

Mex­ico’s cen­tral bank raised its key in­ter­est rate for the sec­ond time in a month on Thurs­day in re­sponse to the US Fed­eral Re­serve’s own rate hike. The Bank of Mex­ico (Banx­ico) said in a state­ment that it hiked the rate by half a per­cent­age point to 5.75 per­cent to “counter ad­di­tional in­fla­tion­ary pres­sures” and strengthen mon­e­tary pol­icy.

Banx­ico said it took into ac­count the Fed’s de­ci­sion on Wed­nes­day to raise the key fed­eral funds rate by a quar­ter per­cent­age point to a range of 0.5 to 0.75 per­cent-the first hike since De­cem­ber 2015 and only the sec­ond in a decade. The peso fell fol­low­ing the US Fed’s de­ci­sion. But it gained 0.34 per­cent Thurs­day, reach­ing 20.65 pe­sos per dol­lar, af­ter the Mex­i­can cen­tral bank’s rate hike. The economies of Mex­ico and the United States are closely in­ter­twined, so any move by the US Fed or the gov­ern­ment can in­flu­ence pol­icy de­ci­sions south of their com­mon bor­der.

The Mex­i­can cen­tral bank had al­ready raised its rate by half a point to 5.25 per­cent on Novem­ber 17 af­ter the peso was rocked by Repub­li­can prop­erty ty­coon Don­ald Trump’s vic­tory in the US pres­i­den­tial elec­tion. The Mex­i­can cur­rency has fallen due to the US pres­i­den­t­elect’s prom­ise to rene­go­ti­ate the North Amer­i­can Free Trade Agree­ment (NAFTA) and threat to curb re­mit­tances sent by mi­grants in or­der to fi­nance a gi­ant bor­der wall. — AFP

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